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I got confused with the hedging question I chose the one that had basis risk and market risk. The person was cross-hedging so I thought there must be basis risk present and there was only one choice that included basis risk which was (basis risk and market risk)

I`m confused now. is that a 100%?

Thanks for clearing things up David. I was a bit confused when I read some people went with a frown.

I thought a jump represents a volatility smile (Heavy right tail and heavy left tail)! a frown is light left and light right tail.. which one was the correct answer?